Williamson-like Critique

Two key governance decisions that were made were optional attendance and soft deadlines. These decisions make this course unique from other courses since most classes are on the opposite end of the scale in these respects, including most other 400 level economics courses. These rules had a huge impact on my behaviour as well as the class as a whole, but I think there was one modification I would recommend which I will look at and explain at the end of this post.

I think not requiring attendance is what caused students to not show up for class. I personally prefer optional attendance for this class since I am not a morning person can find course materials through the course website but I think if attendance was required, it would encourage students to come to class and when more students come to such a class, it makes the class better since we can learn more about different perspectives. I think a good example of this is voting procedures: In most countries, voting for elections is not mandatory which means that people do not have any inclination to vote if they are not bothered about politics or don’t feel like they have to vote. However, as an Australian citizen, I know that voting is mandatory and if I do not vote for elections, I will be given a fine for not doing so. I know that some of my friends have still tried to remain informed about politics despite not being interested in it, so that they can vote for future elections.

However, since this class did not require attendance and had soft deadlines, I did not feel as much stress due this course compared to most other courses, especially major courses. Although students should not feel extremely stressed, I think a bit of stress is always useful since it encourages students to not procrastinate due to the consequences. I think for the class as a whole, not requiring attendance is not necessarily a bad thing since students can always go to class if they are struggling.

The second rule was that assignments had soft deadlines. When I first realized that this class had this rule I was taken aback because I had never heard of this, which is something that makes this class unique. I think this rule had an advantage of giving students extra time to work on their blog posts if they want to improve their posts. The soft deadlines definitely impacted my behaviour since some of my posts were posted after the deadline, but this usually was to improve my posts instead of due to procrastination. While I don’t know how this affects the class as a whole, I doubt it is positive, since it could encourage some students to procrastinate on deadlines and in general be lethargic about meeting deadlines.

I think one thing I would change about this course if I was the professor is to do with the soft deadlines. I think instead of allowing students to submit late and still be graded throughout the course, I would allow them a few chances, to avoid consistent late submissions. This would also mean that as the professor, you would not have to keep wasting time to check posts at multiple different times. Another way to combat this problem could be by only allowing late submissions till a certain point, for example 24-36 hours after the initial due date. I think doing both of these would better (than doing only one) since if you only integrated the second one, it would still encourage students to submit it late every week which does not help them or the professor. Implementing both would encourage students to not leave their posts to the last minute whilst still giving them a bit of leniency and allowing them to learn to be more a mature and responsible person.

Principal Agent

The standard principal-agent model usually involves two principals in real world situations. I can’t think of such a situation in which I was involved, but I know that my mother encounters this daily, since she works as a real estate agent. Because of the way the real estate market works, sometimes there may be two agents involved (one for the buyer and one for the seller). However, most deals involve only one agent meaning she is usually the agent for both the buyer and seller. Since I don’t know any particular case regarding this, I will instead talk about how real estate agents generally operate.

Real estate markets function in a very similar way to what is described in the Excel homework on Bargaining. There is a seller and buyer who are looking for the best outcome in their favour (seller looks for higher price, buyer looks for lower price). However, who the outcome will favour depends significantly on the agent. Consider an example where an agent decides to work in favour of the seller and the seller wants at least x dollars and the buyer is looking for a price under y dollars (the agent usually has an idea of the max/min price for a seller or buyer unless they intentionally lie about it to gain an advantage). The agent will then try and convince the buyer that the seller wants more than x dollars (even though it isn’t true) to convince the buyer that they will need to raise their offer. This relates to the Excel homework on bargaining where we realized that the agent can affect the deal based on who he favours, by claiming that the seller valuates the product more than they actually did or by claiming a lower valuation by the buyer than the actual valuation.

Usually the agent will work in favour of the seller because of two reasons: Firstly, they usually have first contact with the seller who is trying to sell their property (and then try and find suitable buyers). Secondly and more importantly, their income from the deal is a percentage of the value of the deal so they earn more if the property is sold for more. An agent will usually only work in favour of the buyer if there is an incentive, for example personally knowing the buyer, a high possibility of being in future deals with the buyer, or even if the buyer offers the agent a financial incentive to lower the price. Therefore, what is considered as a good performance by both parties are completely different. For the seller it is selling their property for higher than their valuation and for the buyer it is buying it for lower than their valuation.

Broadly speaking, in a situation where the agent does not favour a particular principal, the agent will act with their self-interest in mind. In the case of real estate agents, that means indirectly favouring the seller since the agent will look for a higher price to increase the commission they earn. Taking this into consideration, it would not be fair to say that an agent would fail if they satisfied only one principal but not the other unless that was not their aim. Also, I think because of the way that real estate agents work, this model is not the same as other principal-agent models, since real estate agent nearly always works in their personal self-interest, since neither principal pay them based on how good their performance is but they are instead paid a percentage of the deal.

Group Conflicts

Being in a conflict is something hard to deal with for both sides. If it is a manager-subordinate situation, the manager needs to decide what sort of action to take, which is based on what type of relationship he wants to have with his subordinates in the future and how effective it will be. It is also important to understand where the conflict originated from. It could have been caused by several things, for example lack of communication, disagreements or power dynamics.

While I have not experienced any major personal conflicts in a work context, there is one that comes to mind which I had brought up in one of my earlier blog posts. Last summer, I interned as an automated tester at an IT company that provides tech consulting and business process services. When I joined the automated testing team, there did not seem to be any conflicts at all. I was going through training for the first week and during that time I noticed that everyone was working hard since there was a backlog of uncompleted assignments. However, this was cleared up quite quickly and within 3 to 4 weeks, the office and everyone seemed much less rushed.

After the backlog was completed and they were waiting to receive assignments is when I was assigned to groups with full-time employees. I quickly noticed that everyone felt tired out after the last couple weeks. Sometimes they would come to the office on Saturday or would work from home if they could not make it, and because of this everyone felt exhausted. However, the manager did not give them any time off (I found this out while talking to two other people in my group who were full-time employees) which irritated some people. I think this is where the problem may have originated from, since this could have created a bit of animosity between the manager and his subordinates. Although I did not think at the time that it was nothing for the manager to worry about since it was not a serious situation, I noticed that most people in the office were not completely understanding the manager’s point of view. From the manager’s point of view, it would be hard to give his subordinates a longer break during the day for completing work they should have completed before. Also, since they were not ahead on their assignments, if they took a longer break and did not work at an effective pace, it could lead to another backlog. At the same time, maybe giving a longer break would have helped not only avoid conflict but also relieve the group of pressure which would have helped them to work harder after the break.

A couple days later, during a meeting in the morning where everyone plans for the day, one of the more experienced employees suddenly told the manager that he felt under-appreciated and felt like his work was not being recognized. Then another person said the same thing but since she was outspoken, this came off on the manager the wrong way and he started to defend himself by saying that he should not have to recognize their work all the time since he also has his own work and that they had not been working effectively. He picked out a few people he had noticed were slacking off over the last few days. This immediately got a bad reaction and this time a few more people started to get angry at him. It became clear at this point that the conflict had reached its boiling point.

After a minute of argument in front of everyone, he said that anyone having a problem with him should go with him to the meeting room to discuss it. He was in the meeting room for over an hour and every now and then, one person would leave the room and would be crying or upset, sometimes even angry to the point that they would storm out of the office. The resulting reactions by the rest of the office was generally unfriendly and unreceptive towards the manager for a short period of time. Over the next couple of days everything seemed back to normal and there were no serious conflicts after that.

I think that the problem could have been avoided had the employees been more understanding of the manager’s point of view and vice-versa. While I am not sure, I doubt the manager explained why he could not give them a long break, since otherwise I think everyone would have been more understanding of his decision. That being said, the problem was only in part caused by this and another reason that caused this problem is the manager’s behaviour to some specific employees (again I do not know what caused this, but I think it was related to the having to work for longer hours due to the backlog). Maybe having such a conflict was necessary for everyone to clear things up and relieve the tension and animosity held against the manager.

Discipline in the Workplace

Looking at this new perspective wherein past performance was determined to be poor and there has to be a form of discipline, initially no particular example came to my mind. I think one of the main reasons for this is that most of the time I work in a group in university, it is for an assignment and is only a one-time setup (we won’t have to be in the same group again). Therefore, usually, once the assignment is over, there is no need to consider using a form of discipline for anyone who performed poorly or barely participated. Other times, if there are multiple group assignments in a class, if there is a particular person (or people) who did not perform well when I was in a group with them, I ensure to choose a group of new people who I feel will perform decently. Therefore, in this case also, there is a lack of incentives to discipline team members since it is just a short-term arrangement.

After giving it more thought, I realized that most instances of discipline vary largely. For example, in my internship during the summer of 2018, I recall that when the manager/head of the office would discipline someone, it usually would not be one person in usual but rather the group that person is a part of. I think this is a much better way to discipline someone than do so individually, because this ensures that no one feels targeted. I noticed that after he would talk to any specific group, they would have a discussion amongst themselves for a few minutes about how they can improve. Disciplining in this fashion ensures that the group works more productively since they feel more responsible about how effectively the rest of their group works. This also meant that he had close personal relationships with everyone in that office.

Another example is my internship I went for last summer and went to the same company but worked on a different project and with a different team. The manager/head of this office would discipline his subordinates in a completely different way: He would specify a few people who he felt were not doing their fair share of the work delegated to their group in front of everyone and give them feedback. While he would give them constructive criticism, I feel like those who were singled out would often feel embarrassed and/or upset that he did not have a personal conversation with them instead. On rare occasions, some people would get really upset about this and others would have to comfort them which resulted in lower productivity.

In fact, in one specific situation, he mentioned two people who were two of the most experienced employees in that office, which lead them to get angry at him later in the day and caused a huge argument in the office. This led to a lot of time being wasted during the day since the manager and a few other people went into the conference room to talk it out in private. While I did not directly speak to anyone who was upset, that day everyone was irritated at the manager because they felt that he was trying to divert blame and did not manage the situation well. This could have just been out of bias to support their personal relationships with their friends though. In my opinion, I do not think he was too bothered about sustaining personal relationships, maybe because he did not think that doing so was in the best interest of him or them in terms of productivity. However, despite him perhaps not disciplining his subordinates in the best way, all the groups in this office were extremely productive and rarely missed their deadlines (perhaps his form of disciplining may have hardened them and encouraged them to work more productively to prove him wrong). In comparison, in the first example, the groups were not as productive and often missed deadlines due to poor planning and time management which I think was partially to do with the manager looking to sustain personal relationships and did not give the most critical feedback.

That being said, had I been in either managers’ position, I would not single out anyone in front of everyone else but rather have a private conversation with everyone in a group (if they are not working productively) to understand the cause and then have a conversation with the group as a whole to help provide constructive criticism to them as a group and provide some ways that could help them work more effectively (but eventually leave it up to them to figure out the best course of action). I think that while it is important for a manager to have a good relationship with all their subordinates, it should not get in the way of providing the most useful feedback, which is why finding the best mode of discipline is of the utmost importance.

Team Production and Gift Exchange

In my opinion, the three articles are trying to explain human tendencies when it comes to gift exchange. The first article talks about an observational experiment carried out on three-year-olds that identifies and attempts to explain situations in which they decide to or not to distribute their combined wealth (marbles) amongst themselves equally. The second article explains why people, specifically children, often feel that life is unfair if and when others get advantages. The third article considers the change in human behaviours when a moral obligation becomes an economic transaction. I think these articles try to prove that human beings act in selfless ways generally but when there are economic incentives to gain, such as increased competition, we tend to act in selfish ways.

An example that I have experienced that relates to such human behaviour is when I was working in a group for a group project, but each student was still graded individually, meaning even though we are in the same group, we have nothing to lose or gain by helping our other group members. This was for a gen-ed class, and our assignment was to write an essay about anything we have learnt since the beginning of the class. We would be given time during discussion sections to discuss each other’s essay topics and provide feedback to each other, but we were also meant to meet outside class since the time allotted in discussion sections was never enough.

However, since everyone just wanted to get feedback on their own work but no one was really bothered whether other people got feedback on their work, their would often be conflicts. For example, everyone would want to display their own work and get feedback on it first. What would then happen is that anyone who has already received feedback would not be involved in giving feedback later on, yet the people who were yet to receive feedback were always involved. I think a large reason for this is that if they provide good feedback to someone, they expect that person to do the same for them. While this is usually what would happen, the people who received feedback would for the most part not even pay attention to the discussion. Also, the people who received feedback would not bother showing up when we met again to give everyone else feedback. This happened right at the start, and when everyone else realized that others were doing this, they decided to do the same thing and by the end of the semester, most people were not even willing to give adequate feedback since they just wanted to get feedback themselves (and not ‘waste’ time in class by giving feedback to others). I think this shows that at the start there was competition (for time since there was a limited amount of time) but few realized it, but as people started to realize it, everyone started to act in selfish ways.

A more positive example that relates to the first example is when I was an intern this summer working as an automated tester at an IT company that provides tech consulting and business process services. I noticed that despite some members of my team being more efficient than others, nearly everyone seemed to be putting in roughly equal amounts of effort into their individual work. Despite having individual work, all assignments were group projects since nearly all assignments were too large to be done by solely one person. I noticed that everyone in my team would act in selfless ways and would consider all team members important and all team members would be applauded. An example of a selfless act in this specific team was some members who were more experienced in using the software would take time out of doing their own work to help other less experienced members, and would still motivate them. Looking back, this example is a good display of the altruistic nature of humans.

These articles display how humans can behave differently in different scenarios, sometimes using their altruistic instincts they gain from a young age and other times not. I noticed instances of each which I had personally experienced in life, specifically the first example, which helped me to understand how gift exchange works in teams and how humans may react under competitive circumstances.

Managing Future Income Risks

The prompt focuses on how we make decisions and how much they are based on considering the future possibilities or whether they are made because it seemed like a good choice at the time. I think the purpose of this prompt is to look back on decisions we have made and try to understand what caused us to make those decisions and whether we considered the uncertainty and risks involved in making such a decision. Many of the decisions I have made in the past have been based on the future and reducing income risks, whilst other decisions have been made simply because they seemed like a good decision at the time (sometimes regardless of the potential income risks).

While I do not have much of an idea of what job I will get, where I will work and what my salary will be, I have considered these when making decisions for my future. For example, when choosing my major when I was applying to colleges, I started looking at what skills are most sought after now as well as what skills are expected to be in high demand in the future (10 to 20 years from now). While I was already interested in Computer Science, this gave me a better incentive and more reason to opt for a major in Computer Science. I opted for Computer Science and Mathematics because I was always interested in Mathematics and I found out through research, that students who study Mathematics along with Computer Science are also highly sought after. Regardless of the demand in this field, I was taking a huge risk since I was going to be paying tremendous fees despite not knowing whether Computer Science was a field I really wanted to go in since I did not have much experience in the field.

After my sophomore year, however, I realized that I was no longer interested in Mathematics and decided to switch to Computer Science and Economics since I had already taken 3 Economics courses by that point and enjoyed them thoroughly. In this case, I felt there was a smaller risk than initially applying for a Computer Science and Math major. This was because I took a more informed decision this time since I was confident that Computer Science and Economics were both fields that I was interested in pursuing which is also increases my marketability for a job in the future since there is increasing demand and low supply of people with skills in both fields.

One of my friends who graduated last year applied for a major in Computer Science, but he chose that major because he felt that it was a growing field, despite not having much experience in it and not enjoying the experiences he had with coding. He struggled with keeping up with CS courses and ultimately decided to switch to a Civil Engineering major after his sophomore year, which was something he was always interested in, but had decided not to study it since he considered it to have fewer job opportunities after graduation. However, after switching majors he was doing much better academically and enjoyed his courses much more. After graduating, he got a job offer from one of the biggest automation companies in the world and is now working there. While he took a big income risk by changing his major, it worked out well for him in the end since he enjoys the work he does more than when he was studying CS. What I learned from him is that sometimes it is worth taking a risk to pursue what you really want to do, since he took a huge risk by doing so and it paid off for him.

Reflection Post

Before writing this post, my previous blog posts (and the prompts) seemed to address different topics and seemed to not have any connections whatsoever. The blog posts have so far addressed several topics: Transaction costs, Opportunism, Organization and structure of teams (and the features of high functioning teams), and transfer pricing (the idea of implementing a system of “Illinibucks”). Reflecting on my blog posts, most of them do not have many concrete connections with each other, but looking back, there are some instances or themes when I observed a connection. For example, when we looked at transaction costs and team structure, in my post about transaction costs, I spoke about working in a team during an internship where I felt there were transaction costs, which related to the discussion about team structure in which I talked about how group projects for classes work in different ways to teams in companies made up of employees. Also, the post about opportunism and Illinibucks were also similar in the way that opportunism was a concept that could be applied to the hypothetical system of “Illinibucks”, since opportunism would cause students to act in immoral ways, such as by misusing their allocation of Illinibucks. If Illinibucks were created, it would also create a black market for Illinibucks where students would buy and sell their Illinibucks for real money.

Initially, I did not completely understand how the prompts related directly to the course, sometimes because I did not understand the concept, although most of the time it was simply because I did not see any relation. For example, when I wrote the blog post about Opportunism, I did not quite understand how it related to economics at all, and specifically this course. However, after writing the blog post about Illinibucks and transfer pricing, I began to understand how opportunism relates to transfer pricing and how it explains human behaviour. By relating the concept of opportunism to scenarios I have observed in my life, I understood how the concept relates to several other concepts not only in this course but in economics in general. For other blog posts, the connection between the prompt and the course themes were very obvious, such as the blog post about team structure in which I was able to directly link my experiences to the themes of this course.

Thinking back on how I would write the blog posts, I noticed a few things that have changed. Firstly, I have become more confident about what I am writing about since the first blog post. At first I would be unsure whether the experience I was planning to write about was a good choice and whether I would be able to explain my thought process clearly to help the reader understand how my experience relates to the prompt and the course as a whole. Secondly, I started to provide more context in my post so that the reader can better visualize my experience and my point of view. In terms of the actual process, after the third blog post, I realized that I was having difficulties relating the prompt to the content of the course. Therefore, I since have started to read the prompt beforehand so that I have time to think about it rather than reading the prompt and then immediately start writing my response. Also, I started to write my response in different parts since I remembered that when it comes to writing long responses, this technique helps me since this way I have more time to come up with different idea to relate to my post. This is something I also do with coding assignments: I start early and work on it in small bits and pieces and sometimes I suddenly have a huge breakthrough which helps me to understand how to solve the problem.

I think there are a few things I would change about the prompt which I feel would provide more benefits to not only me, but to other students, the class and to the discussion as a whole. The key aspect of the prompt I would change is that I would try to make the prompt more clear when it comes to relating it to the course themes. As I explained, I struggled with this at the start of the semester and had the prompts been directly related to the course themes/contents, I would have better understood the concepts and fewer students, including myself, would misunderstand the prompt. Although this does not relate directly to how I would write the prompts, I think it would also help students if they could see sample blog posts about the same/similar concept since this would help avoid people misunderstanding the concept and creating an incorrect connection between the concept and their personal experiences.

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